03.23.20 - The Federal Reserve has announced unprecedented measures in an attempt to calm markets. The Fed is now living with no limits to backstop credit markets. The COVID-19 virus has pushed the Federal Reserve to do whatever is necessary to stop the bleeding. As American households and businesses are being crushed by economic shut down the Fed will now purchase treasury’s and mortgage backed securities and other debt securities “in the amounts need to support smooth market functions” in an effort to prevent another Great Recession. These actions go further than the measures taken during the Financial Crisis of 2008-09.
The Fed is in full crisis prevention mode as the global economy faces severe disruption. Fed Leaders wrote in a statement: “The Federal Reserve is committed to using its full range of tools to support households, businesses, and the U.S. economy overall in this challenging time."
The aggressive steps taken by the Federal Reserve are showing that they are deeply concerned but that they are determined to prevent shockwaves of the COVID-19 virus to send the economy into another financial crisis by any means necessary.
Source: Wall Street Journal, Bloomberg